Bankoh's earnings narrowly exceed estimates

Bank of Hawaii Corp., which announced over the weekend it would offer Visa credit cards to its customers after a five-year absence, raised its 2006 earnings guidance yesterday by $9 million and reported fourth-quarter earnings that beat analysts' estimates by a penny.

The state's second-largest bank in assets posted net income of $44.8 million, or 86 cents a share, compared with $46.2 million, or 82 cents, in the fourth quarter of 2004. Eight analysts surveyed by Thomson Financial had forecast a consensus of 85 cents a share.

Although earnings per share rose 4.9 percent because of Bankoh's stock buyback program, net income was down 3.2 percent from a year earlier because of $6.5 million before taxes that was returned to income in the fourth quarter of 2004 from the bank's loan-loss reserve. In the just-concluded quarter, Bankoh replenished that reserve with pretax income of nearly $1.6 million due to losses from consumer loans.

"We were very pleased with our performance for the fourth quarter and 2005 overall," said Allan Landon, chairman and chief executive of Bankoh. "We saw strong loan originations, increases in deposits and good momentum throughout our bank. We benefited from the strong Hawaii economy in 2005 and we remain optimistic about 2006."

Bankoh estimated that its net income for 2006 will be about $187 million, including a $17 million provision for credit losses.

For all of 2005, Bankoh had net income of $181.6 million, exceeding the high range of its own earnings forecast of $179 million to $181 million that it released after the third quarter. The bank's full-year net income was up 4.7 percent from $173.3 million in 2004. Earnings per share for 2005 were up 10.7 percent to $3.41 from $3.08.

Bankoh's shares soared $2.41, or 4.7 percent, to $54.01 yesterday on the New York Stock Exchange.

The bank also announced yesterday that its board of directors had increased the company's share buyback program by an additional $100 million and was maintaining the stock dividend at 37 cents a share. The dividend is payable March 14 to shareholders as of Feb. 28.

Bankoh's total assets increased 4.3 percent last quarter to $10.2 billion from $9.8 billion a year earlier. Total loans and leases were $6.2 billion, up 3 percent from $6 billion. And deposits were $7.9 billion, up 4.5 percent from $7.6 billion.

Net interest income, which reflects the difference between what the bank pays depositors and what it brings in from loans, grew 3.5 percent to $103.5 million from $99.9 million a year earlier. The net interest margin rose to 4.42 percent from 4.4 percent a year ago. Noninterest income, which includes revenue from service charges and fees, rose 5.1 percent to $50.8 million.

Nonperforming assets decreased 53.3 percent to $6.5 million from $13.9 million a year earlier and the bank's efficiency ratio, a measure in percentages how much it costs the bank to make a dollar of revenue, improved to 53.92 percent in the fourth quarter from 55.37 percent a year earlier.

Separately, Bankoh announced during the weekend that it will offer Visa and American Express cards to consumers and Visa credit cards to businesses under a joint marketing agreement with credit card issuer MBNA America Bank N.A. Bankoh said the new credit cards are expected to be available in the third quarter.

The bank upset some of its 148,000 Visa customers when it sold its Visa credit card portfolio to American Express Co. in December 2000. Customers complained that American Express was less widely accepted among Hawaii businesses.

MBNA, which became a wholly owned subsidiary of Bank of America Corp. earlier this month, also announced last weekend it was purchasing Bankoh's existing branded American Express credit card accounts from American Express. MBNA said it will give existing Bankoh cardholders a new American Express card with the Bank of Hawaii brand issued by MBNA.